MPI Research's 3,300 new jobs one of largest economic developments in Michigan

Jill McLane Baker and Jennifer Harnish | Kalamazoo GazetteWilliam U. Parfet, MPI Chairman and CEO, left. His company would lease Pfizer Building 126, upper right, and Building 267, and spend some $30 million renovating them for MPI's use in downtown Kalamazoo as part of an expansion which may bring some 3,300 jobs to the Kalamazoo area in the next five to seven years. Photos by Jill McLane Baker and Jennifer Harnish | Kalamazoo Gazette.

KALAMAZOO, MI -- Local bioscience company MPI Research will create 3,300 new, Kalamazoo-area jobs -- including at least 400 in downtown Kalamazoo -- during the next five years.

In the largest, single job-creation announcement here in decades, MPI said it is planning $330 million in new capital investment in a deal that will breathe new life into two, downtown Kalamazoo Pfizer Inc. buildings that might otherwise have been demolished.

That move will accommodate additional employment there and is expected to solidify Pfizer's commitment to downtown Kalamazoo.

MPI Research, a Mattawan-based pharmaceutical testing firm, was to announce today plans to occupy 510,000 square feet of laboratory and office space in two other Pfizer buildings and create 120 new jobs downtown within the next year.

It has committed to employing a total of 400 downtown by 2013.

The move is part of a larger expansion plan by MPI, a company co-founded by William U. Parfet, the one-time president of The Upjohn Co., that is expected to create a total of 3,300 new jobs in southwestern Michigan during the next five to seven years.

"The attraction for us is that it's another opportunity to expand, but not on this site," Parfet said of the company's Mattawan headquarters, "and stay in Michigan."

Michigan Gov. Jennifer Granholm said, "I am ecstatic for Kalamazoo and Michigan because we're creating fine high-paying jobs in the life-sciences, which is an area that we know we can compete in."

Granholm said she was struggling to try to put the jobs announcements -- 3,300 jobs directly and up to an equal amount in other jobs indirectly -- in historical context. She said she did not know when the state last had an announcement of so many jobs.

Granholm has signed a bill creating a special pharmaceutical redevelopment renaissance zone for the two downtown Kalamazoo buildings MPI will take over. That action will abate MPI's property taxes there for up to 15 years.

Not a done deal
While the deal hasn't been finalized, MPI expects to spend $330 million in the expansion, Parfet said. About $30 million of that will go to upgrade and equip the two downtown buildings -- Pfizer's Building 126 on East Lovell Street and Building 267 on Portage Street, just north of Lovell.

Pfizer, the New York-based pharmaceutical giant, has been scaling back its presence in downtown Kalamazoo since its 2003 acquisition of Pharmacia Corp. It has agreed to donate the two buildings to the city of Kalamazoo.

The city, in turn, has drafted a plan to lease the property to MPI for $1 a year for five years. At the end of that term, MPI would have the option to buy the property for $1, if it has met its job-creation obligation, officials say.

"Job creation is the economic reward for the city," said Ron Kitchens, chief executive officer of regional economic development agency Southwest Michigan First. "The reality is, a year ago these buildings were probably going to be torn down."

Kitchens was to join Granholm, Parfet and about 250 invited area business people and others today at the Kalamazoo Country Club to announce the multi-layered project, which his organization touted as "one of the nation's largest economic announcements."

Pfizer's role
Pfizer has explored options for the buildings -- including sale, demolition or donation -- since it announced last year it would close the majority of its Michigan research and development operations, eliminating about 250 positions in Kalamazoo, company spokesman Rick Chambers said.

"In January 2007, we announced that we would be closing the Ann Arbor site and our R&D operation in Kalamazoo," Chambers said. "We also said we would work closely with the communities to lessen the impact of those decisions."

Research and development on animal health treatments continue in downtown Kalamazoo with that location and Pfizer's campus in Richland being the company's world headquarters for Veterinary Medicine R&D.

In addition to its donation, Chambers said, Pfizer will invest $50 million to upgrade its one remaining downtown facility, Building 300 on Portage Street.

Last June, the company said it would consolidate animal health research from Richland and Sandwich, England, bringing total Pfizer employment downtown to 550 to 600 in the next year. It had about 400 researchers downtown in January 2007, Chambers said.

Pfizer will receive a $40 million tax benefit for the donation, Chambers said.

Mattawan to see expansion
MPI, the third-largest preclinical drug-testing company in the United States, expects to make further investments in its sprawling, 1-million-square-foot Mattawan facilities in coming years, Parfet said. But details of that expansion have not been determined.

MPI had its origins as International Research and Development Corp. in 1962. Parfet, who left The Upjohn Co. (which had become Pharmacia Corp.) after 23 years, bought a bankrupt IRDC in 1995, reformed it and brought it out of bankruptcy as MPI.

The company has grown from 200 employees when Parfet acquired it, to about 1,600 today. It is growing as large pharmaceutical companies, such as Pfizer and others, outsource more preclinical testing of potential medications to smaller firms.

To aid MPI in Mattawan, state officials also will move up plans to widen and improve the Mattawan exit off I-94.

Tax incentives
Lawmakers in Lansing have approved an amendment to the state's Renaissance Zone law that will benefit MPI's downtown Kalamazoo operation.

Renaissance Zones are based on a geographic area or established for specific industries and they give companies or residents in those zones a 100 percent break on most state and local taxes for up to 20 years. The break period for this project is 15 years.

The city of Kalamazoo also will contribute $150,000 for environmental due diligence activities at the site.

MPI General Counsel Paul Morgan said today's public announcement was precipitated by MEGA's approval of the tax credits. The authority's board meets once a month in Lansing. The action is among pieces of the project needed to move the project forward, he said.

Spin-off effect
Jerome Kisscorni, director of the city of Kalamazoo's Economic Development Corp., called the announcement "the biggest developments in the last 25 years for the city of Kalamazoo" and "one of the biggest projects in the state."

Kisscorni called the economic effects of MPI's investment "mind-boggling."

Local economic development experts say MPI's additional hiring alone should pump $165 million into the regional economy. The average annual earnings of the jobs it expects to create is $50,000.

But Kitchens also predicted that the spinoff effect of the investment could result in another 4,400 to 5,900 jobs in the region, everything from new suppliers to more restaurant workers.

"This is phenomenal for Kalamazoo and for the whole region," Kisscorni said.